Profile: Health Net Inc (HNT.N)

HNT.N on New York Stock Exchange

24 Apr 2015
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Health Net, Inc., incorporated on June 7, 1990, is a managed care company that delivers managed health care services through health plans and government-sponsored managed care plans. The Company operates in two segments: Western Region Operations and Government Contracts. The Company’s divested operations and services were closed out after completion of transition and run-out activities related to its sold businesses. The Company provides and administer health benefits to approximately 5.3 million individuals across the country through group, individual, Medicare, Medicaid, United States Department of Defense, including TRICARE, and Veterans Affairs programs. Through its subsidiaries, it also offers behavioral health, substance abuse and employee assistance programs, managed health care products related to prescription drugs, managed health care product coordination for multi-region employers and administrative services for medical groups and self-funded benefits programs. The Company’s wholly owned subsidiary includes Health Net Federal Services, LLC (HNFS).

Western Region Operations segment

Western Region Operations segment includes the operations of its commercial, Medicare and Medicaid health plans as well as the operations of its health and life insurance companies in Arizona, California, Oregon and Washington, and certain operations of its behavioral health and pharmaceutical services subsidiaries in several states, including Arizona, California and Oregon. As of December 31, 2013, the Company had approximately 2.4 million risk members in its Western Region Operations segment. The Company offers a full spectrum of managed health care products and services. The pricing of its products is designed to reflect the varying costs of health care based on the benefit alternatives in its products. The Company’s health plans offer members coverage for a wide range of health care services including ambulatory and outpatient physician care, hospital care, pharmacy services, behavioral health and ancillary diagnostic and therapeutic services. Its health plans include a matrix package, which allows employers and members to select their desired coverage from a variety of alternatives. The Company’s principal commercial health care products are HMO Plans, PPO Plans, POS Plans and EPO Plans. In 2013, the Company developed new health plans both for the Affordable Care Act and the Health Care and Education Reconciliation Act’s (ACA) individual health insurance exchanges and for off-exchange use that met the ACA’s essential health benefits standard and other requirements. These products had to incorporate new cost sharing features as required by the ACA. Whether sold through the exchange or off exchange, these products must also meet the requirements of four metal tiers: Bronze, Silver, Gold and Platinum. Plans offered in each tier must achieve a prescribed actuarial value. On the exchanges the Company must offer at least one silver and one gold product. The Company also offers catastrophic plans. The Company offers tailored network HMO products throughout its Western Region Operations segment. These networks are structured in a variety of ways, including a tiered provider option based on cost and quality, products tailored to targeted populations and networks organized in conjunction with a strategic provider partner. For example, its HMO ExcelCare product offers a network of HMO doctors, specialists and hospitals in ten counties in California. Its Salud Con Health NetSM product line is a suite of affordable plans targeting the Latino community. In addition, the Company develops tailored network products with strategic provider partners in California, Arizona, Oregon and Washington. As of December 31, 2013, approximately 76% of its California commercial membership was enrolled in capitated medical groups. In addition, approximately 69% of its Medicare and 78% of its Medicaid businesses are linked to capitated provider groups.

Government Contracts Segment

The Company’s Government Contracts segment includes its government-sponsored managed care federal contract with the Department of Defense under the TRICARE program in the North Region and other health care, mental health and behavioral health government contracts. On April 1, 2011, The Company began delivery of administrative services under the Managed Care Support Contract (T-3 contract) for the TRICARE North Region. Under the T-3 contract for the TRICARE North Region, the Company provides various types of administrative services including: provider network management, referral management, medical management, disease management, enrollment, customer service, clinical support service, and claims processing. The Company’s Government Contracts segment also includes other health care, mental health and behavioral health government contracts, and subcontracts that the Company administers for the Department of Defense, the U.S. Department of Veterans Affairs and certain other federal, state and local government entities. Certain components of these contracts are subcontracted to unrelated third parties. The government payor typically determines beneficiary fees and provider reimbursement levels. Contracts under these programs are generally subject to frequent change, including changes that may reduce or increase the number of persons enrolled or eligible, or the revenue received for administrative services. Amounts receivable under government contracts are comprised primarily of contractually defined billings, accrued contract incentives under the terms of the contract and amounts related to change orders for services not originally specified in the contract. In general, Government receivables are estimates and are subject to Government audit and negotiation. Its wholly owned subsidiary, HNFS, administers the T-3 contract with the Department of Defense under the TRICARE program in the North Region. The T-3 contract for the North Region covers Connecticut, Delaware, Illinois, Indiana, Kentucky (except Fort Campbell), Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, Wisconsin and the District of Columbia. In addition, the contract covers a small portion of each of Iowa and Missouri. Under the T-3 contract for the TRICARE North Region, the Company provides administrative services to approximately 2.9 million Military Health System (MHS) eligible beneficiaries. Eligible beneficiaries in the TRICARE program are able to choose from a variety of program options. They can choose to enroll in TRICARE Prime, which is similar to a conventional HMO plan, or they can select, on a case-by-case basis, to utilize TRICARE Extra, which is similar to a conventional PPO plan, or TRICARE Standard, which is similar to a conventional indemnity plan. Under TRICARE Prime, enrollees pay an enrollment fee (which is zero for active duty participants and their dependents) and select a primary care physician from a designated provider panel. Under TRICARE Extra, eligible beneficiaries may utilize a TRICARE network provider but incur a deductible and co-payment which is greater than the TRICARE Prime co-payment. The T-3 contract has five one-year option periods, however, the Department of Defense exercised option period 2 (without exercising option period 1), due to the delay of approximately one year in the government's initial award of the T-3 contract for the North Region.

The Company competes with Kaiser Permanente, Anthem Blue Cross of California, Blue Shield of California, United/PacifiCare, Blue Cross Blue Shield of Arizona and Aetna, Inc., UnitedHealth Group, Inc., WellPoint, CIGNA Corp., Humana, Inc., Regence Blue Cross Blue Shield of Oregon, PacificSource Health Plans, Providence Health Plan, and Moda Health Plan, Inc., Humana, Magellan Health Services, ValueOptions, Inc., and TriWest Healthcare Alliance.

Company Address

Health Net Inc

P: +1818.6766000
F: +1302.6555049

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